We can’t stop it! Started in January 2022, the increase in rates is expected to continue for the eleventh consecutive month. The increases are between 15 and 55 cents, depending on the banking institutions, in this month of November 2022. If we can expect this increase to continue until the end of the year, the beginning of January 2023 should bring some air to the market. Indeed, it is at this time that the next reassessment of the usury threshold will take place.
How far will the rate hike go?
Rates remain on the rise in November 2022. According to banking institutions, some are even close to the usury rate, which stands at 3.05% for loans of 20 years and more since the last increase in October.
Here, in detail, an update on the current conditions and on the evolution of the average rates in the month of November:
- in 7 years the market rate increases by 0.35 points to reach 1.95%;
- in 10 years, with an increase of 0.35 points, the average rate exceeds the symbolic bar of 2%;
- over 15 years the market rate goes from 1.80% to 2.10%;
- in 20 years the average market rate also jumped by 0.35 points to 2.30%;
- in 25 years the market rate also increases by 0.35 points to 2.40%.
In terms of the average rates observed on the market, therefore, the bullish effect is substantial, with increases of 30 basis points or more for all durations. In terms of the best rates, the dynamics are identical and all terms show increases of between 12 and 40 basis points. For example, the best 20-year mortgage rate increased by 0.28 points to 1.75%.
With the continued rise in 10-year OATs (Treasury bill equivalents) that allow banks to refinance, it’s a safe bet that the rise in real estate rates will continue. A breath of fresh air should arrive soon with the reassessment of the usury rate scheduled for January 2023. In fact, a rise in usury rates should restore some flexibility to the credit market.
In the meantime, you should know that some banks remain open to financing and may be ready to grant preferential rates to borrowers, depending on the profile. Banks are also particularly selective before agreeing to cut their margins and sell at a loss. Therefore, to benefit from attractive conditions, the borrower must show a solid track record with substantial personal contributions and a good level of income.
Get a home loan on the best terms
Since January 2022, runaway inflation and rising credit rates have shaken borrowers and weighed on the real estate purchasing power of the French. However, it should be borne in mind that the loan conditions remain favorable with regards to a inflation exceeding 6% in October 2022 (+6.2% according to INSEE). Furthermore, it is possible to negotiate advantageous rates for banks with ambitions of conquest. However, the project manager must present a solid financing file and have sufficient lending capacity. Indeed, the establishments are vigilant and the conditions of access are becoming complex. In this context, some candidates could postpone their purchase projects while the real estate market could present opportunities with price reductions depending on the sector.
Faced with this situation, access to credit at the best rate becomes a matter for professionals. Indeed, only a well-established dossier has a chance of obtaining funding. This is why it is more than ever advisable for anyone applying for a loan hire a mortgage broker. Thanks to this expert, the borrower benefits from support from the preparation of the loan application procedure to the release of funds through the negotiation of a loan at the best rate.